How Tyson Became the Chicken King

By DOUGLAS FRANTZ

Published: August 28, 1994

SPRINGDALE, Ark.—
Don Tyson, the chairman of Tyson Foods and America's chicken king, had the flushed look of a kid caught sneaking a peek at an X-rated videotape. Two other company executives also appeared mildly embarrassed to be discovered huddled around a television at the sleek headquarters building, where Andy Warhol competes for wall space with mounted marlins.

"Oh, uh, we're just watching a commercial for, uh, Butterball turkeys," muttered Mr. Tyson as one of the other men reached quickly to shut off the television. "Gotta be going anyway."

Only after the boss departed did one of the participants confess. They had been watching a videotape called "The Clinton Chronicles," an 83-minute, innuendo-filled attack on President Clinton that contains inflammatory allegations about Mr. Tyson's relations with his fellow Arkansan in the White House.

Tyson Foods Inc. is the world's largest poultry producer and processor, but its name has been in the headlines more often lately because of its ties to President Clinton and his Administration.

First came the disclosure that Tyson's general counsel had guided Hillary Rodham Clinton's unusually profitable trading in cattle futures. Then the Justice Department recommended appointment of a special prosecutor to investigate whether Agriculture Secretary Mike Espy violated the law by accepting plane rides, lodging and football tickets from Tyson.

In a sure sign things are not going well, Tyson's troubles wound up in a David Letterman late-night monologue. In a jab the other night at Mr. Espy's flights, Mr. Letterman deadpanned: "Good news, ladies and gentlemen. President Clinton today announced that the Tyson chicken company will be flying American combat troops to Haiti free."

The folks at Tyson are not laughing. "It's time-consuming and tiresome," groused the 64-year-old Mr. Tyson recently between bites of garlic chicken at Herman's Ribhouse, his favorite restaurant in nearby Fayetteville. "I could be doing something productive."

The poultry business is not nuclear power or airlines. But it is highly regulated, from state laws restricting truck weight to Federal inspectors who work alongside employees in plants. This means a company Tyson's size gets plenty of opportunities to brush up against the politicians who set policy and the regulators who enforce it.

"We don't make the system," said Archie Schaffer 3d, Tyson's director of media and government affairs, "but we have to play in it.'

And Tyson is a big player. From a one-truck business started by Mr. Tyson's father in the Depression, the company mushroomed from its Arkansas roots into a global empire through market innovations and a hardball acquisition strategy. It ranks 110th on the Fortune list of America's 500 largest companies, with $5.2 billion in sales projected for this year. It sells 6,000 food products in 57 countries, from fresh chickens to taco fillings. And it has made Don Tyson a very wealthy man, worth an estimated $800 million. 'Grow-or-Die' Philosophy

Now, the company faces a risky new challenge as it tests the next phase of Mr. Tyson's "grow-or-die" philosophy. Tyson's business acumen -- as well as its political firepower -- is trained on the fishing industry, where the company hopes to replicate its success with chickens. The record is dismal so far, but no one familiar with the company is ready to write it off.

"Time will fix Tyson's seafood business and bring it into the operating story of the company," said John C. Bierbusse, an analyst with A. G. Edwards in St. Louis.

So far, the story of Tyson has been the story of chicken. Driven by health concerns and lower prices, Americans nearly doubled their chicken consumption in the last 20 years. Chicken surpassed beef as the most popular main course in the American diet. So businesses grew and consolidated. What was once a small regional industry run by families is now a true agribusiness in which 20 companies control 79 percent of production.

As the dominant company, Tyson slaughters 29 million chickens a week, producing twice as much chicken as second-ranking ConAgra and nearly three times as much as Frank Perdue's Perdue Farms. Tyson chicken shows up in 88 of the top 100 restaurant chains, in everything from McDonald's Chicken McNuggets to KFC's new rotisserie gold, both of which Tyson helped develop.

Tyson is the leading chicken supplier in Japan. This year, it will ship 300 million pounds of chicken to Russia, mostly leg quarters which are not as popular in the United States. Pursuing its next bonanza, Tyson executives were in China last week seeking Government approval for poultry ventures there.

In its drive to dominate the "center-of-the-plate" protein business, the company is now the nation's second-largest producer of hogs and is expanding its beef processing capacity. To complete the menu, Tyson bought the largest at-sea fishing processing fleet, Seattle-based Arctic Alaska Fisheries, in 1992.

But this month the diversification drive stung the company twice, raising questions about whether Tyson is overreaching. First, plans to grab a big share of the turkey industry failed when WLR Foods, the second-largest turkey producer, rebuffed a hostile bid led by Mr. Tyson himself. Tyson's First Write-Off